The Pros And Cons Of Inflation

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In a market economy there is a regularity of up and down moments. When the prices of goods and services start to increase, the economy can only expand so far until it starts to slow considerably .These goods and services rising are called inflation. Demand pull inflation, is when the demand of the goods and services in an economy rise at a much faster rate than the economy has room to produce (Pride, Hughes, & Kapoor, 2014).Once prices rise to an unsustainable level, is called a bubble and typically leads to a recession. During a recession GDP is contracting, people have less disposable income, and production goes down (Pride et al., 2014). However, the government implements strategies to keep the economy growing at a steady pace. These strategies are refereed to as monetary and fiscal policies. Both monetary and fiscal policies want to stabilize and grow the economy at a steady rate, but they go about doing them in different ways. The monetary side manages the interest rates, as well controls the flow of money…show more content…This was when everyone was buying a stock with ".com" at the end the of it. The high demand for technology companies drove their stock prices to unsustainable levels. When investors began to realize these companies were not going to be profitable, they began to sell them. Many investors lost considerable wealth in these investments. In 1997 the Fed 's monetary policy was to raise interests from 5.5% up to 6.6% in 2000. This raised the interest rate to curb the inflation primarily caused by the heavy investing of ".com" companies. After the burst of the ".com" bubble in the year 2000 the Fed ultimately lowered the Fed Funds Rate beginning in 2001 to 1.75% after cutting it nine times. As you can see during times of inflation the Fed Fund Rate is raised to slow down inflation and when it is lowered the thought process is to try to stimulate the

Constant changes in market economies make it nearly impossible to maintain a constant level of economic activity. Fluctuations are the heart of market economies; market economies cannot exist without them. These fluctuations can be described as the business cycle, and like every cycle there are a series of events that construct these phases. The business cycle consists of three phases, expansion (until peak point is reached), a decreasing point into recession, and a rebound from recession to recovery

Monetary and fiscal policy and their applications to the third world countries with a huge informal sector
This essay seeks to explain what are monetary and fiscal policy and their roles and contribution to the economy. This includes the role of the government in regulating the economical performance of a country. It also explains the different features and tools of monetary and fiscal policy and their performance when applied to the third world countries with a huge informal sector.
Monetary Policy

Monetary Policy
Monetary policy is the mechanism of a country’s monetary authority (usually the central bank) controlling money in the economy so as to promote economic growth and stability by creating relatively stable prices and low unemployment. A monetary policy mainly deals with the supply of money, availability of money, cost of money and the rate of interest so as to attain a set of objectives aiming towards growth and stability of the economy.
Monetary policy is said to be expansionary

The Canadian Economy has endured mass fluctuations in recent history, leaving many weary on the present conditions of Canada’s economy. Ushering into 2014, the Canadian Economy seems poised to flourish however, as seen in the past, nothing is ever perfect. The economy has displayed many aspects, both positive and negative, that leave individuals puzzled about what’s on the horizon. Once decoded it is often a mystery what method of action the government should take to ensure our country continues

experiences our economy has taken a great burden which has resulted in unsubstantial unemployment rates, fluctuating interest rates, unstable GDP, and an increase in taxes. Our behavior when involved in a national crisis is, we panic and turn to the government to fix the chaos and restore peace. The federal government’s responsibility to its citizens is to respond to the changes in the economy by using the necessary tools to re-establish stability.
Expansionary Fiscal and Monetary Policies are economic

BRAZIL ECONOMY
Brazil’s economy mainly supported by well-developed agricultural, mining, manufacturing, and service sectors. Brazil's economy overshadows that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has shown steady improvement upon macroeconomic factors, increased foreign reserves, and reduced its debt profile by shifting its debt burden towards domestically held instruments.
After strong growth in 2007 and 2008, Brazil was

Purpose of the Monetary and Fiscal Policies in America
The Monetary and Fiscal Policies, although controlled by two
different organizations, are the ways that our economy is kept under
control. Both policies have their strengths and weaknesses, some
situations favoring use of both policies, but most of the time, only
one is necessary.
The monetary policy is the act of regulating the money supply

have too high expectation on monetary policy to achieve long-term goals which can only be accomplished “by the appropriate policy mix and the cooperation of other public institutions.” Orphanides focused on three major goals burdened on Central banks (CB) which are full employment, fiscal sustainability and financial stability; and developed his arguments using four typical economies, US, Japan, UK and Euro area. He claimed that especially after the GFC, monetary policy is compelled to achieve these

Economic Health/Fiscal Policies and Federal Reserve/Monetary Policies Paper
Understanding Gross Domestic product is central for understanding the business cycle and the progression of long-run economic growth (Hubbard & O’Brien, 2011, p. 631). The GDP is defined as the value-added of all goods and services produced in a given period of time within the United States (2008). The GDP is widely used as an gauge economic wellness and health of the country. What the GDP represents has a hefty impact

Within the United Kingdom the main macroeconomic policies used include the Fiscal, monetary and the supply side policies. These different policies are what the government and Central bank use to make estimations and forecast about the upcoming years. These policies are important because it helps out the government accurately estimate the values for their upcoming years. The information acquired by these estimations help the government and Central Bank run the country to the best of their ability